Qantas Airways
and
Emirates
have been put on notice their new global alliance will be closely monitored for signs of higher airfares after the competition watchdog granted final approval.

The Australian Competition and Consumer Commission gave clearance for
Qantas’s
alliance with Dubai-based Emirates on condition the airlines do not reduce flights between Australia and New Zealand.

But ACCC chairman
Rod Sims
told The Australian Financial Review the regulator would re-examine the alliance in five years.

“These authorisations are very different to a merger," Mr Sims said, adding the regulator would look at changes to market structure, how Qantas and Emirates have behaved, and whether airfares had increased.

“Always that will be the temptation . . . but our thinking was there’s enough competition on each of those routes that if they did raise fares they would lose market share."

The proliferation of alliances between airlines, a model typified by
Virgin Australia
, meant regulators were increasingly comfortable that such tie ups would not unduly lessen competition, Mr Sims said.

The ACCC clearance was the largest hurdle to a deal that will see Qantas shift its hub for connecting European flights from Singapore to Dubai and sell tickets on Emirates as if the Middle Eastern carrier’s flights were its own.

Analysts noted the requirement to maintain existing capacity on trans-Tasman routes had implications for Virgin’s plans to buy
Tiger Airways
, because the ACCC would probably make the same capacity requirements.